Groupon Founder Sacked As Deal Demand Falls
Struggling deals website Groupon has ousted its founder and chief executive as the company loses money and worries grow that people are tiring of its business model.
"I've decided that I'd like to spend more time with my family. Just kidding - I was fired today," Andrew Mason, 32, wrote in a memo to staff.
"If you're wondering why, you haven't been paying attention."
The announcement came a day after Chicago-based Groupon reported a bigger-than-expected loss and gave a weak revenue outlook for the current quarter.
"The events of the last year and a half speak for themselves," Mr Mason wrote. "As CEO, I am accountable."
Groupon has built its business on offering discounts for everything from restaurants to Botox but it has fallen short of its financial expectations for two quarters.
Mr Mason said its current share price is now almost one-quarter of its November 2011 initial public offering (IPO) listing price.
At the time, Groupon was the largest internet flotation since Google went public in 2004.
Shares in the publicly traded company jumped after Thursday's announcement, which had been anticipated for months.
Executive chairman Eric Lefkofsky and vice chairman Ted Leonsis were appointed to the office of the chief executive while a replacement is found.
Mr Mason told employees they "deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance".
Concern about Groupon's business model began even before the company's IPO.
It has been easy for other companies to copy, and many users quickly tired of the frequent emails touting cheap manicures and two-for-one dinner deals.
"The question is whether this as a business model can last," Gartner analyst Michael Gartenberg said.
Groupon makes money by taking a cut from the online deals it offers on a variety of goods and services.
Groupon had the advantage of being the first company of its kind but many successful copycats have syphoned off market share.
It also has faced scrutiny about high marketing expenses, a large employee base and its revenue accounting methods.
Mr Mason, a former punk band keyboard player, founded Groupon in 2008.
By 2010, Groupon was available in 25 countries and its staff ballooned to nearly 10,000 employees - many times that of other internet start-ups such as Twitter and Facebook.
Groupon's stock has lost about 77% of its value since the IPO. That includes a loss of $1.45, or 24%, on Thursday.
The stock gained nearly 4% in after-hours trading following the announcement of Mr Mason's departure.